Problem 6-16 Colter Steel has $4,200,000 in assets. The temporary current assets are in place for nine months and reduce to zero for three months. Temporary current assets Permanent current assets Capital assets Total assets $ 1,000,000 2.000.000 1,200.000 $ 4,200.000 Short-term rates are 8 percent. Long-term rates are 13 percent (Note that long term rates imply a return to any equity). Earnings before interest and taxes are $996,000. The tax rate is 30 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing. what will earnings after taxes be? For an example of perfectly hedged plans, see Figure 6-8 Earning after taxes